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Exactly. Google's approach is to lose money on creating the OS and promoting it (give it free to handset manufacturers) but hope to make money off the users tha

Exactly. Google's approach is to lose money on creating the OS and promoting it (give it free to handset manufacturers) but hope to make money off the users that use it. I am sure they can make money from this, however, I am also sure Apple will make more money per user by selling an actual phone to them AND making money from the user.

bmelton 16y ago
I'm guessing that's debatable. I don't know anywhere close to the numbers, but effectively, you're saying that the iPhone (a few hundred dollar purchase up front, plus maybe a few hundred dollars every couple years) is worth more than the lifespan of how much revenue per user those users will be worth using search. The flip side of the gamble is that Google makes money of search and ad revenues even if they don't sell an Android. Sure, the users aren't AS likely to use gmail, or picasa web sharing, or what have you, but they likely make some money off of almost every smart phone user, regardless of whether their phone is an Android, iPhone, Blackberry or Windows Mobile. You might be right, for sure, but I think Google is the long-term winner here.
- raganwald 16y ago
  Will Apple win by selling phones or will Google win by selling ads? I don't know. Will handset manufacturers win by indenturing themselves to the carriers and with a commodity OS? No.
- al_james 16y ago
  Arh... But apple sells the phone AND the ads (iAd) AND makes a profit from iTunes!
  - parfe 16y ago
    I think the difference is: Apple sells a vertically integrated device where they profit on every level. Google is working to create and grow a mobile market that just didn't exist. I don't think you can compare the two approaches directly. Google is making sure their primary business profit center has a market while Apple is maintaining a top to bottom ecosystem they can control. And they are spreading that control style to desktops.
- ZeroGravitas 16y ago
  Apparently Microsoft made more money from Mac Office than Apple did on selling the machines. I can see that being repeated with smartphones. Similarly, I feel much better about switching to Android seeing that all the core uses of my iPhone (Youtube, Gmail, Maps, Calendar, Reader) are provided by Google.
- mechanical_fish 16y ago
  This post, factually correct though it is, just shows the absurdity of setting up these arbitrary contests. How can you possibly compare Google's business model with Apple's? Google seeded the world with Android to jumpstart the smartphone revolution faster. That means that more people will see more web ads sooner. For every day that X people view web ads, Google makes money; this is especially true if that day is tomorrow, rather than five years from now, because Google's share of the web ad business is really good now and doesn't seem likely to go up from here. [1] So Google increased the area under the smartphone-users-vs-time curve for the next few years, and will then make money on that. Google also makes money on Apple's products, of course. If Apple were capable or interested in saturating the near-term market with iPhones, Google wouldn't have needed to bother with Android, and maybe they wouldn't. And, to the extent that Apple does eventually saturate the market with iPhones, Google might slack off on Android. Though that also depends on what happens with iAds. Meanwhile, Apple primarily sells gadgets. They make money by selling more gadgets or by maintaining high margins, or both. Their businesses are intertwined, and the actions of one affect the other, but they're not in the same business and you can't run a horse race between them. Companies don't win some prize by having a higher market share, or higher total market cap, or higher total revenue. Zappos isn't a failure just because its $1B revenue is 65 times smaller than Apple's. --- [1] Though who knows? There are other ad businesses in the world than the one Google currently dominates.
  - bmelton 16y ago
    A year ago I would have had nothing further to say on the matter than what you just did... then Apple introduced iAds which I think will keep Google on its toes regarding Android until they've cemented/protected their revenue stream, which may be indefinitely.

bmelton 16y ago

I'm guessing that's debatable. I don't know anywhere close to the numbers, but effectively, you're saying that the iPhone (a few hundred dollar purchase up front, plus maybe a few hundred dollars every couple years) is worth more than the lifespan of how much revenue per user those users will be worth using search. The flip side of the gamble is that Google makes money of search and ad revenues even if they don't sell an Android. Sure, the users aren't AS likely to use gmail, or picasa web sharing, or what have you, but they likely make some money off of almost every smart phone user, regardless of whether their phone is an Android, iPhone, Blackberry or Windows Mobile. You might be right, for sure, but I think Google is the long-term winner here.

raganwald 16y ago
Will Apple win by selling phones or will Google win by selling ads? I don't know. Will handset manufacturers win by indenturing themselves to the carriers and with a commodity OS? No.
al_james 16y ago
Arh... But apple sells the phone AND the ads (iAd) AND makes a profit from iTunes!
- parfe 16y ago
  I think the difference is: Apple sells a vertically integrated device where they profit on every level. Google is working to create and grow a mobile market that just didn't exist. I don't think you can compare the two approaches directly. Google is making sure their primary business profit center has a market while Apple is maintaining a top to bottom ecosystem they can control. And they are spreading that control style to desktops.
ZeroGravitas 16y ago
Apparently Microsoft made more money from Mac Office than Apple did on selling the machines. I can see that being repeated with smartphones. Similarly, I feel much better about switching to Android seeing that all the core uses of my iPhone (Youtube, Gmail, Maps, Calendar, Reader) are provided by Google.
mechanical_fish 16y ago
This post, factually correct though it is, just shows the absurdity of setting up these arbitrary contests. How can you possibly compare Google's business model with Apple's? Google seeded the world with Android to jumpstart the smartphone revolution faster. That means that more people will see more web ads sooner. For every day that X people view web ads, Google makes money; this is especially true if that day is tomorrow, rather than five years from now, because Google's share of the web ad business is really good now and doesn't seem likely to go up from here. [1] So Google increased the area under the smartphone-users-vs-time curve for the next few years, and will then make money on that. Google also makes money on Apple's products, of course. If Apple were capable or interested in saturating the near-term market with iPhones, Google wouldn't have needed to bother with Android, and maybe they wouldn't. And, to the extent that Apple does eventually saturate the market with iPhones, Google might slack off on Android. Though that also depends on what happens with iAds. Meanwhile, Apple primarily sells gadgets. They make money by selling more gadgets or by maintaining high margins, or both. Their businesses are intertwined, and the actions of one affect the other, but they're not in the same business and you can't run a horse race between them. Companies don't win some prize by having a higher market share, or higher total market cap, or higher total revenue. Zappos isn't a failure just because its $1B revenue is 65 times smaller than Apple's. --- [1] Though who knows? There are other ad businesses in the world than the one Google currently dominates.
- bmelton 16y ago
  A year ago I would have had nothing further to say on the matter than what you just did... then Apple introduced iAds which I think will keep Google on its toes regarding Android until they've cemented/protected their revenue stream, which may be indefinitely.